Is Active Real Estate Investing the “Only” Option?

As an active buy-and-hold real estate investor, I can tell you first hand that active real estate investing is not easy and thankfully, it is not the only option for real estate investors.

First let me be clear.

If you put in the time, effort and have the financial backing to watch the slow trickle of cash flow build into a fast moving stream, then by all means go for it! Buy-and-hold investing is a tremendous ride with many exciting ups and downs.

It has been over ten years since I began building my portfolio of rental homes and the rewards are finally rolling in.

I must admit, when I first started, I didn’t think it would take over 10 years to see meaningful returns from my buy-and-hold strategy. After all the books I read made it seem fairly easy.

About 5 years ago, something struck me, as I kept buying more properties and reading more books. Most if not all of the articles and books I had read were authored by people who had made real estate investing their full time job.

However, full time real estate investing is not for everyone, myself included. I love my full time job and have no plans to leave it anytime soon.

How to be an Active Real Estate Investor while Working Full Time

You should plan or at least understand the following if you choose to actively invest in real estate while holding a full time job.

1) The most important and hardest member of your team to find will be a trusted property manager. A bad property manager can rob you blind if you are not careful. While a good property manager can become your best asset for long term success. I would interview no less than 5 property management teams before I chose my team. I addition I would look for a team that has between 400 and 800 rental doors. I also prefer property management teams where the owners also invest in real estate.

2) You will have many bad months as an active real estate investor. I define a bad month as one where you have to cut a check to pay the mortgage out of your own personal account. If you don’t have the financial means to pay the bills for at least a couple of months without a rent check, then don’t buy investment real estate yet. Stuff happens in this business and in my experience, they seem to happen simultaneously. So one bad month can become back-to-back bad months.

3) This business is hard work and takes a lot of time. Don’t believe the hype about quick and easy riches in the buy-and-hold business. You must be slow and methodical.

4) Set goals, monitor your goals and recalibrate as time goes by. I recommend setting goals in 90-day intervals at the beginning. This ensures constant monitoring and positive momentum throughout the year.

Active real estate investing while holding a full time job is hard work.

Good news for those of you who have been on the fence about active real estate investing and hoping for another option — you have one! It is called passive real estate investing.

Passive Investing?

A passive real estate investor can in essence become the lender on assets that are currently depressed and produce income as a result.

By becoming the lender in an environment with low rates, passive investors can setup streams of income that exceed net cash flow projections on rental homes. Assuming the passive investor researches the active investor, the program, and the specific deal, one can establish a stream of monthly checks without the headache of active management.

In closing, please know that active real estate investing while holding a full time job can be exciting and rewarding, but it is not the only option available in today’s market place.

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About Author

Michael Zuber is an active buy-and-hold real estate investor who still has a full-time job. Michael is not an agent or broker, and simply uses the internet and agent relationships to drive his business. He currently averages at least one deal a month and has developed laser focus on his 5 step process.

Great points REI, where are you from? I also think just like with anything if you are going to invest, INVEST. Do it knowing all (or as many of) the potential threats and rewards of this career. It’ really not for the faint of heart. Thanks for sharing.

Great Article. I can tell you I have been in this business for about 20 years. There re some great short term flips that earn big profits, but those profits usually disappear quickly. The real secret to building wealth with Real estate is in the buy and hold rentals.

Hi Steve, I loved your article, it was great, we’re friends through facebook. I am a younger guy who wants to be a buy and hold investor like you. I think you really made some great points here, I was wondering if I could talk to you breifly because I am considering buying my first rental unit and I had some questions? Thanks for the article!

Real estate investing is really tough. You need a lot of patience and hard work in this line of business. I agree with you that goal setting is really important in order to be successful. You should have a concrete road map of where your investment will take you after a certain period of time.